Why Apple Doesn't Have a Loyalty Program

November 3, 2016
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As a loyalty specialist it’s my job to know which brands have rewards programs and which don’t. When I went through a list of my favourite stores, I was happy to see that all of them had some sort of customer loyalty program…except for one.  

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Apple doesn’t have a loyalty program, and this realization led me to wonder why.  Without a retention marketing strategy many other brands have fallen off the map as customers continue to choose brands that give them an incentive for coming back.

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The same can’t be said for Apple.  According to Time magazine, Apple makes upwards of $70,000 in profit every second.  These profits turn into $18 billion dollars annually, which leads me to believe they’re doing something to keep their customers coming back.

In light of this baffling conclusion, I decided to push my analysis of Apple’s customer experience even further to see if I could figure out why Apple doesn’t have a loyalty program.

 

 

Reasons Apple Doesn’t Have a Loyalty Program

Apple is what you might call a luxury brand.  In other words, they sell products that come with a higher price tag and have a lower purchase frequency.  Many brands see this as a barrier for customer loyalty, claiming it can’t work for their luxury brand when in fact it can!  

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However, the reason Apple doesn’t have a loyalty program has nothing to do with the potential difficulty of starting a loyalty program for their brand.  As one of the wealthiest companies in the world, they can more than afford an effective retention strategy that rewards their best customers for their brand loyalty.  No, the reason Apple doesn’t have a loyalty program is because they already have a retention strategy – it’s just not labelled as one.

Let me explain.

1. Retention Metrics

Almost all of our loyalty resources reiterate that in order to run a successful loyalty program your store needs to have a high repeat purchase rate and an equally high customer lifetime value.  These metrics help you determine whether customers return to your store enough times to make running a loyalty program valuable for your business.

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When you look at Apple’s product lineup, their products are quite expensive.  Even their small accessories cost a pretty penny!  This makes it unlikely that customers would want to shop with Apple multiple times a year.  But Apple has a trick up their sleeve.

As a technology company Apple’s products are constantly changing.  Since their inception, Apple has been targeting emerging markets and pushing the boundaries of technology.  Almost every year Apple releases an updated version of their products or software, and these changes prompt their customers to race out and buy it.  While my cynical dad refers to this as “the cult of Apple”, I see it for what it is: smart marketing.  

 

 

Apple knows they don’t need a loyalty program because the words “new and improved” hold a lot of weight for their customers.  Shoppers always want to be able to say that they have the newest piece of technology, and this desire prompts them to purchase new products even if their current devices aren’t even that old!  With that guaranteed purchase frequency every single one of their customers goes up in value and adds to their healthy margins, making a loyalty program redundant.

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2. Customer Lock-in

Besides the allure of “new and improved”, customers also keep returning because Apple’s products set the company apart from the competition.  Their operating system and interfaces are so dramatically different from other brands that many customers feel it’s not worth the effort to learn a new system – no matter how much cheaper it may be.  

 

 

This is what’s known as customer lock-in, because the customer becomes dependent on a brand to provide a certain product or service.  Loyalty programs are one way others brands battle this phenomenon.  With mobile apps and digital customer experiences, loyalty programs are becoming an integrated part of a customer’s lifestyle that make it unappealing to switch brands.

This idea of a lifestyle solution is another reason Apple doesn’t have a loyalty program.  Through the introduction of the iPod, iPhone, and iPad, Apple has firmly established themselves as a brand whose products work seamlessly together in an effort to improve their customers’ lifestyle.  Add to that the introduction of Apple Pay and the tech giant has made it possible for their customers to have everything they need at their fingertips.  

 

 

In a society that values ease and convenience, Apple’s simple interface and integrated products provide all the appeal needed to keep up with today’s busy consumers.  No loyalty program needed.

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3. Customer Differentiation

At Smile.io, we’re huge believers in tiered loyalty programs.  Whether we’re talking about some of the world’s best loyalty programs or ways to increase customer engagement, dividing customer into groups is an easy and effective way to elevate a rewards program to champion status.

So how can this be achieved if Apple doesn’t have a loyalty program?  Simple: diversified products.

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When Apple releases a product, they don’t stop at one.  Whether it’s an iPod, iPad, Macbook, or iPhone, it’s safe to assume that multiple versions will be released in order to accommodate customers coming from different life situations.  

Many of Apple’s marketing campaigns highlight this directly, using customers of different ages, genders, and walks of life to emphasize how their products can be used by anyone.  These campaigns get shoppers to subconsciously align themselves with others who they view as peers and create a sense of camaraderie.

Customers are also grouped according to price.  When the iPhone 5 came out, many of my friends opted for the 5c because it was slightly cheaper but delivered many of the same features.  The status associated with price is often a conversation point for Apple customers, as they try to convince others that their device is superior because they paid more.

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By incorporating these considerations into their product design, Apple doesn’t need to further segment their customers to establish a sense of accomplishment.  With luxury products in such high demand, being able to afford the newest model is accomplishment enough.  These incentives make the additional gamification of official customer tiers unnecessary.

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4. Exclusivity

Customer tiers are also great for promoting a sense of exclusivity.  After all, everyone wants to be part of the in-crowd, right?  Loyalty programs like Sephora’s VIB Rouge and Starbucks’ Gold Rewards thrive on this desire, but once again Apple doesn’t have a loyalty program to help them.  Instead, they rely on the way their products look.

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Think about it: Apple devices are smooth, sleek, and shiny.  These three features scream luxury, wealth, and class – especially when combined with their metallic colour.  On top of that, Apple is the brand of choice for many media, tech, and design brands.  These clients have led many people to associate Apple products with style, modernity, and forward-thinking.  

 

 

This persona is infinitely valuable to many shoppers, and has resulted in a culture that people actively seek to be a part of.  Whether it’s their phone, tablet, or laptop, people are constantly using their devices and advertising their membership in the Apple family.  So where Sephora and Starbucks use their loyalty program to appeal to people’s lifestyle, Apple is the lifestyle and everyone wants to be a part of it.  

 

 

By embracing luxury culture, Apple is able to promise their customers that anyone who buys their products will become a member of the social elite, and this opportunity is too tempting for many customers to pass up.

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5. Customer Experience

More than anything else, rewards programs are used to enhance a brand’s overall customer experience.  From email marketing to customer service, rewards programs tie everything together to make unforgettable brand experiences.

Apple doesn’t have a loyalty program to make this happen because they have other factors in place.  While the exclusivity and elitism of their brand is a key factor, the more important consideration is their exceptional customer service and Genius Bar. apple doesn't have a loyalty program guru

The Genius Bar is a long table where Apple “Gurus” help customers fix problems with their devices.  Whether it’s replacing a part or simply trouble-shooting the issue, Apple uses the Genius Bar as a way of delivering personalized service to each of their customers.  Each appointment is tailored specifically to what the customer needs assistance with, and can be scheduled ahead of time.  These considerations demonstrate an understanding of their customers’ lifestyles and make it a desirable service for customers to take advantage of.

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In addition, Apple has made their brand accessible no matter where you are.  Whether it’s on a mobile device, via telephone, or in a brick and mortar store, Apple is available to assist their customers virtually 24/7, demonstrating a commitment to service excellence that is hard to beat.  These services show that Apple cares about their customers and understand their needs, delivering exceptional customer experience with each interaction.  

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The Power of Apple

After looking at Apple from a number of loyalty marketing angles, I think we have a better understanding of why they don’t have (or need, for that matter) a loyalty program.  With thriving customer lifetime values and repeat purchase rates in the luxury products market, they have demonstrated that their product is appealing enough to keep people from switching brands.

Additionally, the sense of elitism that comes from owning an Apple product and the attentive customer experience they provide makes them accessible to customers from different lifestyles, keeping their products relevant and prevalent in the larger social landscape.

 

 

Based on Apple’s success, some of you will now be wondering if this brand strategy will work for everyone.  To be blunt, the answer is no.  Apple is a unique brand whose original mandate was to set itself apart from the competition.  That goal, combined with exceptional customer service, has allowed them to pursue customer loyalty in other ways that would not work for every brand.

That being said, there are many resources available to help you determine if customer loyalty is right for your store, and if you can Smile.io is more than happy to help!  

They may say that an apple a day keeps the doctor away, but customer loyalty is what makes the customers stay.